After this period of slow going, however, the smart meter technology market in the U.S. is set to ramp up a lot more quickly to $4.69 billion in 2013, up from $1.84 billion in 2008. The total growth of that market over the next five years is actually pretty good — a compounded annual growth rate (CAGR) of more than 20 percent. It’s just the next two years of more modest growth that might take eager smart meter tech makers by surprise. ARC says the hurdles over the next two years include “immature” standards, piecemeal regulatory authority, and just the fact that it takes awhile for utilities and their vendors to install and build out smart meter infrastructure.

Smart grid companies and policy makers have been racing to get standards mapped out within the next few months with the help of The National Institute of Standards, the Electric Power Research Institute, and other standards bodies like the the IEEE (Institute of Electrical and Electronics Engineers). It’s a monumental task, but the reality is these standards won’t be mature (like some that drive computing and the Internet) for years to come. When standards are mature, they are generally accepted by the industry, which leads to more growth, a bigger market and cheaper technology.

But even the smart meter tech standards are relatively immature, says ARC analyst Harry Forbes, who points to “the lack of multi-vendor device interoperability” as an indicator. Despite the efforts of the standards bodies and companies, the lack of standards is a big roadblock to faster growth. Forbes says: “Utilities are reticent to vastly scale up their AMI installations at huge expense given the present level of technology risk and the rate of technology development.”

It doesn’t help that utilities across the U.S. are also governed by so many different regulatory bodies. For example, look at Texas: It regulates its transmission and distribution providers but has deregulated its energy retailers, so there are varying degrees of emerging innovation and competition across sectors. With utilities governed by so many different factors (some market-based, some regulation-based) it’s hard to get them to move fast on anything.

So what do the smart meter tech vendors need to do? Be patient. And wait for the stimulus funds to kick in. The standards will get hashed out, and it’s actually surprising that some utilities have started to move as fast as they have been.